PMI & Loan Types Flashcards
Factors that Influence PMI
Size of loan, loan-to-value ratio, borrower’s credit score
Loan to Value (LTV) Ratio
Outstanding Loan Amount / Sales Price = LTV
PMI typically ranges from __ to ____ of total loan amount
.5%-1.5%
Lender must automatically terminate PMI when?
Either when your LTV reaches 78% or at the midpoint of the loan.
When can the client request PMI cancellation earlier than when the lender must automatically terminate it?
Once Principal Balance falls to 80% of the original loan value.
On what loan type can you NOT remove/terminate PMI?
FHA
UFMIP
Upfront Mortgage Insurance Premium
FHA Upfront Cost
1.75%
FHA Annual Cost
0.8% - 1.05% Annual Mortgage Insurance Premium
Factors that affect FHA charges
loan origination amount and LTV ratio
VA Upfront Costs
1.25% - 3.3% Funding Fee
VA Annual Costs
None
Factors that affect VA charges
Type of loan, military category, down payment amount, first or subsequent loan user.
USDA Upfront Costs
2% Guarantee Fee
USDA Annual Costs
0.5%
Factors that affect USDA Charges
None
How Often Are PMI and MIP adjusted?
Annually
What are PMI and MIP adjustments based on?
Remaining principal balance.
Terms of a Conventional Loan
15, 20, & 30 years
What is the Required Credit Score for a Conventional Loan?
700+
What are the Requirements for a Conventional Loan?
95% Max LTV, at least 5% down payment
What are the Terms of a Neighborhood Conventional Loan?
10, 15, 20, & 30 years
What are the Requirements for a Neighborhood Conventional Loan?
97% Max LTV, PMI if the LTV is higher than 80%, credit score of 660+, At least 3% Down Payment
What is the term for a 5/1 A.R.M. Loan?
30 years
What are the Requirements for a 5.1 A.R.M. Loan?
80% Max LTV, 20% Down Payment (at least 10% needs to be from borrower’s own funds), 720+ credit score, may not live in the home more than 5 years.
What are the terms of an FHA Loan?
15 and 30 years
What are the Requirements for an FHA Loan?
96.5% max. LTV, UFMIP and Annual MIP for all loans, At least 3.5% Down Payment, Credit Score of 600+
What are the Requirements for a USDA Rural Development Loan?
102% Max. LTV, Credit score of 640+, No Down Payment Required, Borrower and Property Must be Eligible
What is a Down Payment Assistance Program?
Typically offered by nonprofit or government entities to help low-income families cover the costs of a mortgage down payment. Sometimes help with closing costs.
